Project Finance Flashcards
What is the difference between value engineering and value management?
Value engineering - Retrospective
Value Management - Proactive.
How would typically control cost through a project?
- Appoint QS.
- Proactive value management approach
- Regular reporting
How do cost estimates assist with the control of cost through a project?
- Provide an estimate of cost at key junctures
- Allow client to understand cost against budget
- Allow for further decisions to be contextualised against estimate and budget.
What are preliminaries?
Costs that are essential for the completion of a project, but aren’t reflected in the finished build
Could you please provide an example of preliminary costs?
- Temporary lighting
- Labour cost
- Site insurance
- Welfare
What is overheads and profit?
- Cost for contractor to make profit and pay bills.
What is typically the OH&P percentage on jobs you are involved with?
- 3 - 7.5%
Who typically manages the professional team fees for the projects you are involved with?
Project Manager
What is the current cost of construction inflation?
4.2% as of June 2023.
What is a cashflow forecast?
- Table
-Shows expected valuation amounts for the project. - Generally calculated monthly.
What shape is a cashflow forecast for a fit-out project
- S graph
What is the shape of a cash flow forecast for a Cat A Refurb?
- Bell curve.
What are some key elements of the RICS cost reporting guidance note?
- Purpose of cost reporting
- Treatment of variations
- Risk allowance management
What is contingency?
A sum held within a clients budget to pay for any discoverable / change when on site.
What percentage contingency do you typically have on a project?
Changes through the deign stages but typically 7.5%
What is a defined provisional sum?
- Described in sufficient detail
- Contract makes a prelim allowance.
- Allowed for within programme.
What is an undefined provisional sum?
- Insufficient detail
- Not allowed for within programme or prelims.
What is CIS?
Construction industry scheme, main contractor pays subbies tax directly to HMRC.
Any contractor or client that spends over £3m a year on construction works needs to be registered.
on Cat A Finsbury Circus, why did your architect not raise earlier their concerns on the soffit quality?
- Raised early at Stage 3.
- Question from me following similar issue on another job.
What remedial works were required to be undertaken to the soffit?
- Infills
- Strip out over existing fixings
How did the QS determine a suitable budget figure for the remedial works to the soffit?
- Benchmarking
- Engaging with a sub-contractor.
What is a provisional sum
A sum within the contract to account for works where not enough information is provided to provide a firm sum.
When expending against the provisional sum, how did you ensure these works were being costed fairly?
- Contractor priced a survey of the infills required.
- QS reviewed against cost
- Three sub-contractor quotes receieved.
Could you please outline some ways in which valuations can be undertaken on projects?
- Against works progress on site.
- Stage payments (agreed at outset)
- Milestone payments
Could you please provide a summary of the Housing Grants, Construction and Regeneration act?
- Staged / interim payments if duration over 45 days.
- Right to suspend performance for non-payment.
- Disallowing pay when paid clauses.
What was the average construction cost inflation for 2022?
15%
Was there a risk of programme delay as a result of the expending this provisional sum and associated works?
- Highlighted on risk register.
- Contractor surveyed as part of site set up to determine level of works required and associated cost.
What would you check if he heard a company you were dealing was insolvent?
- Check companies house.
- Clients Legal Advisor
What is insolvency?
an individual or company can no longer meet their financial obligations to lenders as debts become due
What is the difference between administration and insolvency?
- Adminstration - Adminstrators will run the business in an attempt to return it to profit.
- Insolvency - the overall banner of not being able to pay lenders
What does BCIS stand for?
- Building cost information service
